Question: Please answer this question for me and show how to calculate this question on Microsoft Excel. You are the financial analyst for a tennis racket
Please answer this question for me and show how to calculate this question on Microsoft Excel.
You are the financial analyst for a tennis racket manufacturer. The company is considering using a graphite-like material in its tennis rackets. The company has estimated the information in the following table about the market for a racket with the new material. The company expects to sell the racket for five years. The equipment required for the project has no salvage value. The required return for projects of this type is 13 per cent, and the company has a 40 per cent tax rate. Should you recommend the project?
| Pessimistic | Expected | Optimistic | |
| Market size (unit) | 106,000 | 120,000 | 135,000 |
| Market share | 14% | 17% | 19% |
| Selling price | $121 | $125 | $130 |
| Variable cost per unit | $46 | $43 | $42 |
| Fixed cost per year | $795,000 | $725,000 | $675,000 |
| Initial investment | $2,000,000 | $1,900,000 | $1,800,000 |
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